Roger Brittain has what would appear to be a very good deal from taxpayers.

The Sydney tax accountant is renting a waterside holiday block near Jervis Bay for about $611 a year from the NSW Department of Lands.

And in an area where land values are rising so fast that some holiday homes - be they ever so humble - are now attracting land tax, Mr Brittain can relax.

His holiday house is on Crown land obtained under a 39-year lease that predates 1987, so it is exempt from the tax, according to the Office of State Revenue.

The details are among more than 18,000 Crown leases obtained by the Herald from the Department of Lands under freedom of information laws. Others include leases on four- and five-star resorts up and down the NSW coast, where the same rules apply.

The Herald's investigation has already revealed that offices, factories, marinas, petrol stations and golf courses are operating on state-owned land for peppercorn rents. Nearly half the state is rented for a combined yearly income of just $60 million - less than $2 a hectare.

Mr Brittain is not vacationing alone on the 2.5-hectare block in Wrights Beach. There are 18 neighbours on the site, which is being rented collectively for $11,610 a year.

One of those neighbours is the prominent Wollongong lawyer Thomas Sherley, who, with Mr Brittain, is a director and shareholder of Harmony Haven Centre Pty Ltd, which obtained the lease in 1969.

Mr Brittain, who has been involved from the beginning, may have paid an upfront sum to secure the leasehold but the Herald has not been able to ask him that question because he has not returned repeated phone calls.

Mr Sherley, who became a director in 1994, said the original block offered for lease was twice the size.

Also competing for the land was the Australian Coal and Shale Employees Federation (now the United Mine Workers Union), which wanted it for a caravan park.

"They both tendered and they both ended up going to court to fight it out," Mr Sherley said "And the judge did a Solomon."

The court gave half the land to Harmony Haven and half to the union, which pays $14,300 a year for its portion.

The rent charged is based on a formula that takes into consideration only the unimproved value of the land. In other words, the department assumes that instead of a small holiday community and a caravan park, there is just an empty paddock.

The union's portion is now the Bushy Tail Caravan Park, offering 97 mobile-home sites to retired and current members, and to members of the public, for between $1500 and $2000 a year each, according to a Union spokesman, Bob Mitchell.

However, the Harmony Haven portion is more exclusive.

"Our bit is divided up on a company-title basis, which means no-one owns a distinct portion of land but [each person] has the right to use it for their little holiday shack," Mr Sherley said.

"So we have so many little spots and we each have the right to occupy our little area. There is a road through, and we all share the power and lights and have a working bee once a year."

Mr Sherley said he had a right to sell his portion, on which he has built a holiday home.

Since the lease was first granted, a number of people had bought and sold shares in Harmony Haven, giving them the right to build or occupy a holiday cottage on a portion of the land.

"I have been trying to sell my lot for some time but as soon as you mention crown lease you just lose your buyers. That's the downside," he said.

"The upside is it is reasonably cheap to run and maintain."

Barbara Southon, who lives on the block with her husband, David, paid $15,000 for a share in Harmony Haven 18 years ago.

She is philosophical about what may happen when the lease comes to an end. She said "quite substantive" homes had been built there.

"We were relative latecomers when we bought in 18 years ago. Originally it was a holiday house, but we moved in full-time about seven years ago," she said.

"We do wonder what is going to happen when the lease comes to an end. But we are interested in the quality of life we can get here, and if we lose the house, we lose it.

"The rent is incredibly cheap, but when you balance it out against security of tenure it is not a wise financial investment."